Robert Shiller, Yale University: “Strategic default on mortgages will grow substantially over the next year, among prime borrowers, and become identified as a serious problem.

Edward Glaeser, Harvard University: “Construction levels will stay low and my best guess is that housing prices — the 20 city Case-Shiller average — will be within 5% of current level, one side or the other.”

Alan Blinder, Princeton University: “U.S. interest rates will go up across the board. Probably more at the long end than the short end.”

A positive attitude may not solve all your problems, but it will annoy enough people to make it worth the effort. -- Herm Albright

The major indices have steadily moved higher since the first of November. Volume has been quite light at times, but we've had very limited pullbacks, and we even managed to break out to new recent highs without much of a struggle.

Positive seasonality has certainly helped keep the momentum going, but the most striking thing about the action is how confident and unconcerned market players have been. In fact, various sentiment polls show that bullishness is at its highest level in years.

When things look this good, some bears will always view it as a contrarian indicator. The idea is that with so much positive sentiment, most traders must already be heavily long, and that doesn't leave much buying power on the sidelines to drive us even higher.

Even though we had an amazingly long and persistent uptrend in 2009, it was one of the most hated rallies I have ever seen. Market players struggled the whole year, trying to reconcile the strong market action with high levels of worry about the overall economy. It was a classic case of climbing a "wall of worry."

As we enter 2010, the skeptics and pessimists are pretty worn out. They have fought the action for many months and were absolutely flattened by a market that was consistently overbought and extended on light volume.

So will the steadily increasing level of bullish complacency finally be a contrary indictor? The biggest problem with this argument is that it isn't a very precise timing device. We can run higher for a very long time on high levels of optimism, especially in an environment like we have had for months, where people are still recovering from the shock of the dramatic crash we suffered in 2008 and early 2009.

When bullish complacency is high, many market players will be poorly positioned if we do see some market weakness. Many will have to scramble to cut back positions and protect gains should we begin to falter. It can make for a very quick spike down once some selling kicks in.

As we continue to trend higher on light volume, the chances of a correction grow, but as I've written many times, markets tend to trend up or down much further and longer than seems reasonable to most of us. Trying to anticipate when a trend might end is the most dangerous thing you can do.

I don't try to anticipate a market turn; rather, I wait until some selling actually kicks in. If it really is a meaningful top or bottom, then the new trend will last for a while. We don't want to lose our hard-fought profits, so we should stay very vigilant and make sure we quickly lock in some gains when things do start to weaken.

Give the benefit of doubt to the bulls until they actually do something wrong. The price action will tell us when it's time to be more defensive, and so far there isn't much wrong with this market other than the fact that a lot of folks are pleased with it.

We have a very slight negative open on the way, and it's fairly quiet. Asian stocks we mostly up but Europe is mostly down. -----------------------------Ülespoole avanevad:

Some on FOMC said wind-dwon of MBS may hurt housing Fed officials still concerned about weak labor market - DJ FOMC members said more stimulus 'might become desireable' One FOMC member thought asset purchases could be scaled back